Investcorp takes control stake in Berger Financial

Investcorp has acquired a majority stake in Berger Financial Group, entering North America’s wealth management market through a platform overseeing more than $3 billion in client assets.
Financial terms of the transaction were not disclosed. Berger’s management team and financial advisers will retain a significant ownership interest, while the company’s existing leadership will continue to manage its day-to-day operations. Investcorp will gain representation on the firm’s board.

The deal gives the Bahrain-founded alternative investment manager a foothold in a fragmented industry attracting growing volumes of private equity capital. Wealth management businesses offer recurring fee income, strong client retention and opportunities to expand through acquisitions of smaller registered investment advisers.

Berger, founded in 1981 and headquartered in Minnesota, provides financial planning, retirement advice, tax planning and portfolio management. It serves more than 3,800 clients through nine offices across the United States.

The firm employs about 30 financial advisers and has expanded through a mixture of organic growth, recruitment and acquisitions. Its leadership and employees had held ownership interests through an internal stock programme before the Investcorp transaction.

Berger’s services are built around a planning-led model rather than a narrow focus on investment products. That approach has helped the company build long-term relationships with individual investors and retirement savers whose financial requirements often span investments, taxation, estate planning and income needs.

Investcorp selected Berger after spending several years studying possible investments in the North American wealth management industry. The group plans to support further expansion through adviser recruitment, technology investment, broader client services and acquisitions of complementary advisory businesses.

Managing director Vitali Bourchtein said Berger combined a fee-based model with high levels of client and adviser retention. He said the platform had substantial room to expand within a large market that remains divided among thousands of independent firms.

Berger chief executive Nick Asmus said Investcorp’s investment experience and understanding of the advisory industry would help strengthen the company’s market position and increase its capacity to scale.

The transaction reflects several long-term forces reshaping financial advice in the United States. An ageing population is raising demand for retirement planning, while large amounts of wealth are expected to move from older households to younger generations over the coming decades.

Clients are also dealing with more complex tax, investment and estate-planning decisions. At the same time, assets continue to shift towards advisers operating under fiduciary and fee-based models rather than traditional commission-driven brokerage arrangements.

Private equity firms have responded by backing wealth managers that can act as acquisition platforms. Independent advisory businesses are often attractive targets because many are profitable, founder-led and positioned in local markets, but lack the capital or infrastructure needed to expand nationally.

The model allows a larger investor to provide financing, technology and operational support while acquired firms preserve adviser relationships and elements of their local identity. It can also create succession options for ageing founders who may struggle to transfer ownership internally.

However, the growing role of institutional capital has also increased scrutiny of consolidation. Advisers and clients may face questions about whether acquisition targets can preserve service standards and independence while meeting investors’ expectations for growth and returns.

Investcorp indicated that the Berger deal was not primarily designed to distribute alternative investments to retail clients. Such products are not a major part of Berger’s existing client offering, and the immediate focus will remain on building the advisory platform.

The investment extends Investcorp’s exposure to specialised professional services. Its previous holdings in the sector have included accounting and advisory firm PKF O’Connor Davies, consultancy AlixPartners, CrossCountry Consulting, communications adviser ICR, technology consultancy Resultant and United Talent Agency.

Investcorp’s North America private equity operation has invested in mid-market companies for more than four decades. It has completed more than 79 transactions representing over $25 billion in aggregate transaction value.

The group has also been seeking deeper access to the expanding retirement savings market in the United States. Retirement plans and individual accounts represent a potentially important distribution channel for asset managers as regulators and financial companies explore wider participation in private-market investments.